SEOUL, March 28 (Xinhua) -- Loan relevant to real estate development became a major risk factor for South Korea's financial system, the central bank said Thursday.
The real estate project financing (PF) loan became a major risk factor facing the financial system as it was interlinked with diverse stakeholders such as construction and financial companies, the Bank of Korea (BOK) said in its financial stability report.
The PF loan, extended by financial institutions, grew slower in recent months, but the bad loan ratio kept rising due to the faltering housing market, the BOK noted.
The real estate PF loan totaled 135.6 trillion won (100.6 billion U.S. dollars) at the end of December last year, up 1.4 trillion won (1 billion dollars) from three months earlier.
The delinquency ratio for the PF loan increased 0.28 percentage points to 2.70 percent in the cited period, financial watchdog data showed.
The BOK concluded that despite a possible growth in soured PF loan and risks from higher debt repayment burden, the country's financial system remained stable on the back of the improved financial market and the slower increase in household debt.
The ratio of household credit to nominal gross domestic product (GDP) shrank to 100.6 percent in the fourth quarter of 2023 from 101.5 percent in the previous quarter.
The central bank had left its benchmark interest rate unchanged at 3.50 percent since January last year. ■
